Can I reduce or miss periodical payments because my business is closed or because I have been furloughed?

Q.  Can I reduce or miss periodical payments because my business is closed or because I have been furloughed?

A. Unfortunately, we have seen some parties making unilateral decisions to reduce or miss periodical payments. These are payments ordered within a financial settlement and relate to those payments ordered either for the benefit of the former spouse, or the children to the marriage.

Such actions are a direct breach of the court order and the other party can apply to the court to enforce the order, to include payment of anything due. This could result in the court also imposing sanctions such and/or a costs order against the party in breach of the order.  

If you find yourself in a position where you cannot make the payments the interim, due to the impact of Covid–19, this would be considered an unforeseen change in circumstances, which could potentially be significant enough to require an interim or longer term variation.

However, it does not automatically enable a variation to be made. There are several factors which will need to be considered, including the impact of those changes on the individual person, including consideration of income, assets and needs.

Likewise, the circumstances of the receiving party must also be considered, including the impact on their income and needs, short and long term and including the needs of the children. They are also likely to be impacted quite significantly.

It does not follow that the payments should reduce or cease to reflect the change in income. It should not therefore always be used as an excuse, where other financial means are available to make the payments. It will be important to review your case and set it our clearly in support of any required variation. 

It would be advisable for the parties to seek legal advice and try to reach a written agreement to cover the interim position, but only where needed.  The starting point to any further negotiations would be full and frank disclosure.

In the absence of an agreement, the payments must legally continue until further order. If you are in a position where you cannot make those payments by any means or are unsure what to do, you should seek immediate legal advice.

If an order is required, it is not going to happen overnight, so careful planning is required.

Whilst unprecedented times, our specialists are well known for successfully representing parties in variation cases, so have the experience and skills to advise and assist in these circumstances.